For the first time since 2020, the Federal Reserve recently cut interest rates and signaled that more are to come. But is it a good thing or a bad thing for your finances?
Well, it depends.
The stock markets typically rise when interest rates are lowered – seeing that as a positive for business investment – and, sure enough, stock markets rose to new highs following the announcement. That’s likely been good news for your 401(k) or 403(b).
It’s also likely good news if you’ve been thinking about buying or refinancing a house as lower interest rates generally mean lower mortgage rates/cost, as well as purchases like a new or used car. It could also be good news for interest on debt or credit cards.
On the other hand, lower interest rates likely mean that bank savings accounts, money market funds, and certificates of deposit (CDs) will pay less interest.
Ultimately, whether the rate cut (and more are anticipated in the not-too-distant future) is a positive or negative will depend on your personal situation, and the decisions you’ll be looking to make. But it’s a good time to rethink and possibly make changes in your financial situation.
That’s Wella’s Way!